QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

OR

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-9810

_______________________________________________________

Owens & Minor, Inc.

(Exact name of Registrant as specified in its charter)

_______________________________________________________

Virginia

54-1701843

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

9120 Lockwood Boulevard,

Mechanicsville, Virginia

23116

(Address of principal executive offices)

(Zip Code)

Post Office Box 27626,

Richmond, Virginia

23261-7626

(Mailing address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code (804) 723-7000

_________________________________________________________

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “larger accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

x

Accelerated filer

o

Non-accelerated filer

o (Do not check if a smaller reporting company)

Smaller reporting company

o

Emerging growth company

o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares of Owens & Minor, Inc.’s common stock outstanding as of October 27, 2017, was 61,249,613 shares.

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization

41,060

42,182

Share-based compensation expense

8,592

8,934

Provision for losses on accounts receivable

1,158

(216

)

Deferred income tax (benefit) expense

(4,585

)

(3,233

)

Changes in operating assets and liabilities:

Accounts receivable

(79,114

)

5,023

Merchandise inventories

(56,134

)

(5,066

)

Accounts payable

79,787

58,742

Net change in other assets and liabilities

(40,634

)

(44,903

)

Other, net

5,719

1,366

Cash provided by operating activities

5,645

144,511

Investing activities:

Acquisition, net of cash acquired

(366,569

)

—

Additions to property and equipment

(24,963

)

(13,682

)

Additions to computer software and intangible assets

(12,826

)

(7,081

)

Proceeds from sale of property and equipment

780

4,497

Cash used for investing activities

(403,578

)

(16,266

)

Financing activities:

Change in bank overdraft

—

21,753

Proceeds from debt issuance

250,000

—

Borrowing under revolving credit facility

117,200

—

Financing costs paid

(1,798

)

—

Cash dividends paid

(47,316

)

(47,802

)

Repurchases of common stock

(5,000

)

(48,654

)

Other, net

(7,363

)

(8,118

)

Cash provided by (used for) financing activities

305,723

(82,821

)

Effect of exchange rate changes on cash and cash equivalents

5,137

6,652

Net increase (decrease) in cash and cash equivalents

(87,073

)

52,076

Cash and cash equivalents at beginning of period

185,488

161,020

Cash and cash equivalents at end of period

$

98,415

$

213,096

Supplemental disclosure of cash flow information:

Income taxes paid, net

$

26,917

$

57,996

Interest paid

$

19,951

$

20,023

See accompanying notes to consolidated financial statements.

6

Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity

(unaudited)

(in thousands, except per share data)

Common

Shares

Outstanding

Common

Stock

($ 2 par value )

Paid-In

Capital

Retained

Earnings

Accumulated

Other

Comprehensive Income

(Loss)

Total

Equity

Balance December 31, 2015

62,803

$

125,606

$

211,943

$

706,866

$

(51,825

)

$

992,590

Net income

81,682

81,682

Other comprehensive loss

3,263

3,263

Dividends declared ($0.765 per share)

(47,671

)

(47,671

)

Shares repurchased and retired

(1,378

)

(2,757

)

(45,896

)

(48,653

)

Share-based compensation expense, exercises and other

274

549

4,923

5,472

Balance September 30, 2016

61,699

$

123,398

$

216,866

$

694,981

$

(48,562

)

$

986,683

Balance December 31, 2016

61,031

$

122,062

$

219,955

$

685,504

$

(67,483

)

$

960,038

Net income

49,796

49,796

Other comprehensive income

41,141

41,141

Dividends declared ($0.7725 per share)

(47,169

)

(47,169

)

Shares repurchased and retired

(155

)

(310

)

(4,687

)

(4,997

)

Share-based compensation expense, exercises and other

373

747

4,228

4,975

Balance September 30, 2017

61,249

$

122,499

$

224,183

$

683,444

$

(26,342

)

$

1,003,784

See accompanying notes to consolidated financial statements.

7

Owens & Minor, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, unless otherwise indicated)

Note 1—Basis of Presentation and Use of Estimates

Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of Owens & Minor, Inc. and the subsidiaries it controls (we, us, or our) and contain all adjustments (which are comprised only of normal recurring accruals and use of estimates) necessary to conform with U.S. generally accepted accounting principles (GAAP). All significant intercompany accounts and transactions have been eliminated. The results of operations for interim periods are not necessarily indicative of the results expected for the full year. The Clinical & Procedural Solutions (CPS) business segment has been renamed "Proprietary Products" effective January 1, 2017. Byram Healthcare (Byram), acquired on August 1, 2017, is included in the Domestic segment. There have been no other changes to the segment composition or our method of measuring segment operating earnings.

Reclassifications

Certain prior year amounts have been reclassified to conform to current year presentation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make assumptions and estimates that affect reported amounts and related disclosures. Actual results may differ from these estimates.

Note 2—Fair Value

The carrying amounts of cash and cash equivalents, accounts receivable, financing receivables, accounts payable and financing payables included in the consolidated balance sheets approximate fair value due to the short-term nature of these instruments. The fair value of long-term debt is estimated based on quoted market prices or dealer quotes for the identical liability when traded as an asset in an active market (Level 1) or, if quoted market prices or dealer quotes are not available, on the borrowing rates currently available for loans with similar terms, credit ratings and average remaining maturities (Level 2). We determine the fair value of our derivatives, if any, based on estimated amounts that would be received or paid to terminate the contracts at the reporting date based on current market prices for applicable currencies. See Note 8 for the fair value of long-term debt.

Note 3—Acquisition

On August 1, 2017, we completed the acquisition of Byram Healthcare, a leading domestic distributor of reimbursable medical supplies sold directly to patients and home health agencies.

The consideration was $367 million, net of cash acquired, which is subject to final working capital adjustments with the seller. The purchase price was allocated on a preliminary basis to the underlying assets acquired and liabilities assumed based upon our current estimate of their fair values at the date of acquisition. The purchase price exceeded the preliminary estimated fair value of the net tangible and identifiable intangible assets by $263 million, which was allocated to goodwill. The following table presents the preliminary estimated fair value of the assets acquired and liabilities assumed recognized as of the acquisition date. The fair value of intangibles from this acquisition was primarily determined by applying the income approach, using several significant unobservable inputs for projected cash flows and a discount rate. These inputs are considered Level 3 inputs. The allocation of purchase price to assets and liabilities acquired is not yet complete.

We are amortizing the preliminary fair value of acquired intangible assets, primarily customer relationships and a tradename, over their estimated remaining weighted average useful lives of 10 years.

Goodwill of $263 million, which we assigned to our Domestic segment, consists largely of expected opportunities to expand into the non-acute market with direct to patient distribution capabilities. None of the goodwill recognized is expected to be deductible for income tax purposes.

Pro forma results of operations for Byram has not been presented because the effects on revenue and net income were not material to our historic consolidated financial statements.

Acquisition-related expenses in the current year consisted primarily of transaction costs incurred to perform due diligence and to analyze, negotiate and consummate the Byram acquisition, and costs to transition the acquired operations. We recognized pre-tax acquisition-related expenses of $3.1 million in 2017 related to these activities.

Note 4—Financing Receivables and Payables

At September 30, 2017 and December 31, 2016, we had financing receivables of $176.9 million and $156.5 million and related payables of $105.5 million and $110.0 million outstanding under our order-to-cash program and product financing arrangements, which were included in other current assets and other current liabilities, respectively, in the consolidated balance sheets.

Note 5—Goodwill and Intangible Assets

The following table summarizes the changes in the carrying amount of goodwill through September 30, 2017:

Domestic

International

Proprietary Products

Consolidated

Carrying amount of goodwill, December 31, 2016

$

180,006

$

19,391

$

215,539

$

414,936

Acquisition (See Note 3)

263,155

—

—

263,155

Currency translation adjustments

—

10,001

2,138

12,139

Carrying amount of goodwill, September 30, 2017

$

443,161

$

29,392

$

217,677

$

690,230

9

Intangible assets at September 30, 2017, and December 31, 2016, were as follows:

September 30, 2017

December 31, 2016

Customer

Relationships

Other

Intangibles

CustomerRelationships

OtherIntangibles

Gross intangible assets

$

241,444

$

41,483

$

118,223

$

4,045

Accumulated amortization

(48,757

)

(2,284

)

(38,429

)

(1,328

)

Net intangible assets

$

192,687

$

39,199

$

79,794

$

2,717

At September 30, 2017, $163.5 million in net intangible assets were held in the Domestic segment, $10.2 million were held in the International segment and $58.2 million were held in the Proprietary Products segment. Amortization expense for intangible assets was $5.1 million and $2.2 million for the three months ended September 30, 2017 and 2016 and $9.7 million and $6.6 million for the nine months ended September 30, 2017 and 2016.

Based on the current carrying value of intangible assets subject to amortization, estimated amortization expense is $11.6 million for the remainder of 2017, $24.6 million for 2018, $24.7 million for 2019, $24.7 million for 2020, $24.4 million for 2021 and $23.5 million for 2022.

Note 6—Exit and Realignment Charges

We periodically incur exit and realignment and other charges associated with optimizing our operations, which includes the consolidation of certain distribution and logistics centers, administrative offices and warehouses in the United States and Europe. These charges also include costs associated with our strategic organizational realignment which include management changes, certain professional fees and costs to streamline administrative functions and processes.

Exit and realignment charges by segment for the three and nine months ended September 30, 2017 and 2016 were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Domestic segment

$

3,880

$

1,224

$

12,421

$

14,194

International segment

574

457

1,406

3,284

Proprietary Products segment

592

465

1,015

1,574

Total exit and realignment charges

$

5,046

$

2,146

$

14,842

$

19,052

10

The following table summarizes the activity related to exit and realignment cost accruals through September 30, 2017 and 2016:

Lease

Obligations

Severance and

Other

Total

Accrued exit and realignment costs, December 31, 2016

$

—

$

2,238

$

2,238

Provision for exit and realignment activities

—

3,211

3,211

Change in estimate

—

(304

)

(304

)

Cash payments

—

(3,034

)

(3,034

)

Accrued exit and realignment costs, March 31, 2017

—

2,111

2,111

Provision for exit and realignment activities

—

1,382

1,382

Change in estimate

—

(18

)

(18

)

Cash payments

—

(667

)

(667

)

Accrued exit and realignment costs, June 30, 2017

—

2,808

2,808

Provision for exit and realignment activities

—

3,156

3,156

Cash payments

—

(423

)

(423

)

Accrued exit and realignment costs, September 30, 2017

$

—

$

5,541

$

5,541

Accrued exit and realignment costs, December 31, 2015

$

486

$

1,840

$

2,326

Provision for exit and realignment activities

—

9,895

9,895

Cash payments, net of sublease income

(486

)

(1,287

)

(1,773

)

Accrued exit and realignment costs, March 31, 2016

—

10,448

10,448

Provision for exit and realignment activities

—

1,254

1,254

Cash payments, net of sublease income

—

(7,087

)

(7,087

)

Accrued exit and realignment costs, June 30, 2016

—

4,615

4,615

Provision for exit and realignment activities

—

725

725

Change in Estimate

—

(268

)

(268

)

Cash payments, net of sublease income

—

(2,066

)

(2,066

)

Accrued exit and realignment costs, September 30, 2016

$

—

$

3,006

$

3,006

In addition to the exit and realignment accruals in the preceding table, we also incurred $1.9 million of costs that were expensed as incurred for the three months ended September 30, 2017, including $1.7 million in information system restructuring costs, and $0.2 million in other costs. For the nine months ended September 30, 2017, we recognized $7.4 million of costs that were expensed as incurred, including $4.5 million in asset write-downs, $1.9 million in information system restructuring costs and $1.0 million in other costs.

We incurred $1.7 million of costs that were expensed as incurred for the three months ended September 30, 2016, including $0.7 million in other facility costs, $0.5 million in labor costs, $0.4 million in information systems costs, and $0.1 million in other costs. For the nine months ended September 30, 2016, we recognized $7.4 million of costs that were expensed as incurred, including $3.6 million in consulting costs, $1.8 million in information system costs, $0.7 million in other facility costs, $0.5 million in labor costs, and $0.8 million in other costs.

We have a noncontributory, unfunded retirement plan for certain officers and other key employees in the United States. Certain of our foreign subsidiaries also have defined benefit pension plans covering substantially all of their respective employees.

The components of net periodic benefit cost, which are included in distribution, selling and administrative expenses, for the three and nine months ended September 30, 2017 and 2016, were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Service cost

$

26

$

27

$

53

$

70

Interest cost

474

508

1,422

1,523

Recognized net actuarial loss

456

412

1,367

1,236

Net periodic benefit cost

$

956

$

947

$

2,842

$

2,829

Certain of our foreign subsidiaries have health and welfare plans covering substantially all of their respective employees. Our expense for these plans totaled $0.5 million and $0.4 million for the three months ended September 30, 2017 and 2016 and $1.3 million for the nine months ended September 30, 2017 and 2016.

Note 8—Debt

We have $275 million of 3.875% senior notes due 2021 (the “2021 Notes”) and $275 million of 4.375% senior notes due 2024 (the “2024 Notes”), with interest payable semi-annually. The 2021 Notes were sold at 99.5% of the principal amount with an effective yield of 3.951%. The 2024 Notes were sold at 99.6% of the principal with an effective yield of 4.422%. We have the option to redeem the 2021 Notes and 2024 Notes in part or in whole prior to maturity at a redemption price equal to the greater of 100% of the principal amount or the present value of the remaining scheduled payments discounted at the Treasury Rate plus 30 basis points. As of September 30, 2017 and December 31, 2016, the estimated fair value of the 2021 Notes was $280.1 million and $274.5 million and the estimated fair value of the 2024 Notes was $276.9 million and $270.0 million, respectively.

On July 27, 2017, we entered into a new Credit Agreement replacing the Amended Credit Agreement. The new agreement provides borrowing capacity of $600 million and a $250 million term loan. We make principal payments under the term loan on a quarterly basis with the remaining outstanding principal due in five years. The revolving credit facility has a five-year maturity. The proceeds from the new borrowing were primarily used to fund the Byram acquisition which closed on August 1, 2017. Under the Credit Agreement, we have the ability to request twoone-year extensions and to request an increase in aggregate commitments by up to $200 million. The interest rate on the Credit Agreement, which is subject to adjustment quarterly, is based on the London Interbank Offered Rate (LIBOR), the Federal Funds Rate or the Prime Rate, plus an adjustment based on the better of our debt ratings or leverage ratio (Credit Spread) as defined by the Credit Agreement. We are charged a commitment fee of between 12.5 and 25.0 basis points on the unused portion of the facility. The terms of the Credit Agreement limit the amount of indebtedness that we may incur and require us to maintain ratios for leverage and interest coverage, including on a pro forma basis in the event of an acquisition. Based on our leverage ratio at September 30, 2017, the interest rate under the credit facility is LIBOR plus 1.375%.

At September 30, 2017, we had borrowings of $117.2 million under the revolver and letters of credit of approximately $5.1 million outstanding under the Credit Agreement, leaving $477.7 million available for borrowing. We also had a letter of credit outstanding for $1.3 million as of September 30, 2017 and $1.1 million at December 31, 2016, which supports our facilities leased in Europe.

The Credit Agreement and senior notes contain cross-default provisions which could result in the acceleration of payments due in the event of default of either agreement. We believe we were in compliance with our debt covenants at September 30, 2017.

The effective tax rate was 48.1% and 34.3% for the three and nine months ended September 30, 2017, compared to 36.3% and 37.3% in the same periods of 2016. The changes in the effective tax rate compared to 2016 resulted primarily from a change in income mix among different tax rate jurisdictions and the effect of certain acquisition-related costs which were not deductible for tax purposes offset on a year to date basis by the release of an income tax valuation allowance in Europe for $3.4 million during the second quarter of 2017.

The liability for unrecognized tax benefits was $13.3 million at September 30, 2017, and $10.7 million at December 31, 2016. Included in the liability at September 30, 2017 were $5.0 million of tax positions for which ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

Note 10—Net Income per Common Share

The following summarizes the calculation of net income per common share attributable to common shareholders for the three and nine months ended September 30, 2017 and 2016.

Our Board of Directors has authorized a share repurchase program of up to $100 million of our outstanding common stock to be executed at the discretion of management over a three-year period, expiring in December 2019. The timing of repurchases and the exact number of shares of common stock to be purchased will depend upon market conditions and other factors and may be suspended or discontinued at any time. Purchases under the share repurchase program are made either pursuant to 10b5-1 plans entered into by the company from time to time and/or during the company’s scheduled quarterly trading windows for officers and directors. During the nine months ended September 30, 2017, we repurchased in open-market transactions and retired approximately 0.2 million shares of our common stock for an aggregate of $5.0 million, or an average price per share of $32.27. As of September 30, 2017, we have approximately $94.0 million remaining under the repurchase program. We have elected to allocate any excess of share repurchase price over par value to retained earnings.

13

Note 12—Accumulated Other Comprehensive Income (Loss)

The following table shows the changes in accumulated other comprehensive income (loss) by component for the three and nine months ended September 30, 2017 and 2016:

Retirement Plans

Currency

Translation

Adjustments

Other

Total

Accumulated other comprehensive income (loss), June 30, 2017

$

(10,743

)

$

(28,348

)

$

165

$

(38,926

)

Other comprehensive income (loss) before reclassifications

—

12,254

94

12,348

Income tax

—

—

—

—

Other comprehensive income (loss) before reclassifications, net of tax

—

12,254

94

12,348

Amounts reclassified from accumulated other comprehensive income (loss)

456

—

—

456

Income tax

(220

)

—

—

(220

)

Amounts reclassified from accumulated other comprehensive income (loss), net of tax

236

—

—

—

236

Other comprehensive income (loss)

236

12,254

94

12,584

Accumulated other comprehensive income (loss), September 30, 2017

$

(10,507

)

$

(16,094

)

$

259

$

(26,342

)

Accumulated other comprehensive income (loss), June 30, 2016

$

(9,999

)

$

(40,186

)

$

(78

)

$

(50,263

)

Other comprehensive income (loss) before reclassifications

—

1,401

82

1,483

Income tax

—

—

—

—

Other comprehensive income (loss) before reclassifications, net of tax

—

1,401

82

1,483

Amounts reclassified from accumulated other comprehensive income (loss)

412

—

—

412

Income tax

(194

)

—

—

(194

)

Amounts reclassified from accumulated other comprehensive income (loss), net of tax

218

—

—

—

218

Other comprehensive income (loss)

218

1,401

82

1,701

Accumulated other comprehensive income (loss), September 30, 2016

$

(9,781

)

$

(38,785

)

$

4

$

(48,562

)

14

Retirement Plans

Currency

Translation

Adjustments

Other

Total

Accumulated other comprehensive income (loss), December 31, 2016

$

(11,209

)

$

(56,245

)

$

(29

)

$

(67,483

)

Other comprehensive income (loss) before reclassifications

40,151

288

40,439

Income tax

—

—

—

—

Other comprehensive income (loss) before reclassifications, net of tax

—

40,151

288

40,439

Amounts reclassified from accumulated other comprehensive income (loss)

1,367

—

—

1,367

Income tax

(665

)

—

—

(665

)

Amounts reclassified from accumulated other comprehensive income (loss), net of tax

702

—

—

702

Other comprehensive income (loss)

702

40,151

288

41,141

Accumulated other comprehensive income (loss), September 30, 2017

$

(10,507

)

$

(16,094

)

$

259

$

(26,342

)

Accumulated other comprehensive income (loss), December 31, 2015

$

(10,482

)

$

(41,228

)

$

(115

)

$

(51,825

)

Other comprehensive income (loss) before reclassifications

—

2,443

119

2,562

Income tax

—

—

—

—

Other comprehensive income (loss) before reclassifications, net of tax

—

2,443

119

2,562

Amounts reclassified from accumulated other comprehensive income (loss)

1,233

—

—

1,233

Income tax

(532

)

—

—

(532

)

Amounts reclassified from accumulated other comprehensive income (loss), net of tax

701

—

—

701

Other comprehensive income (loss)

701

2,443

119

3,263

Accumulated other comprehensive income (loss), September 30, 2016

$

(9,781

)

$

(38,785

)

$

4

$

(48,562

)

We include amounts reclassified out of accumulated other comprehensive income related to defined benefit pension plans as a component of net periodic pension cost recorded in distribution, selling and administrative expenses. For the three and nine months ended September 30, 2017, we reclassified $0.5 million and $1.4 million of actuarial net losses. For the three and nine months ended September 30, 2016, we reclassified $0.4 million and $1.2 million of actuarial net losses.

Note 13—Segment Information

We periodically evaluate our application of accounting guidance for reportable segments and disclose information about reportable segments based on the way management organizes the enterprise for making operating decisions and assessing performance. We report our business under three segments: Domestic, International and Proprietary Products. The Domestic segment includes our United States distribution, logistics and value-added services business. Byram, acquired on August 1, 2017, is included in the Domestic segment. The International segment consists of our European distribution, logistics and value-added services business. Proprietary Products provides product-related solutions, including surgical and procedural kitting and sourcing.

We evaluate the performance of our segments based on their operating earnings excluding acquisition-related and exit and realignment charges, certain purchase price fair value adjustments, and other substantive items that, either as a result of their nature or size, would not be expected to occur as part of our normal business operations on a regular basis. Segment assets exclude inter-segment account balances as we believe their inclusion would be misleading or not meaningful. We believe all inter-segment sales are at prices that approximate market.

15

The following tables present financial information by segment:

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Net revenue:

Segment net revenue

Domestic

$

2,194,143

$

2,287,233

$

6,518,571

$

6,954,687

International

96,661

83,751

287,555

255,861

Proprietary Products

124,542

132,705

392,654

409,022

Total segment net revenue

$

2,415,346

$

2,503,689

$

7,198,780

$

7,619,570

Inter-segment revenue

Proprietary Products

(81,385

)

(88,088

)

(270,339

)

(264,501

)

Total inter-segment revenue

(81,385

)

(88,088

)

(270,339

)

(264,501

)

Consolidated net revenue

$

2,333,961

$

2,415,601

$

6,928,441

$

7,355,069

Operating earnings (loss):

Domestic

$

36,056

$

41,034

$

102,812

$

126,202

International

(2,163

)

1,382

(754

)

3,402

Proprietary Products

9,102

14,340

26,040

41,866

Inter-segment eliminations

416

(449

)

(266

)

(905

)

Acquisition-related and exit and realignment charges

(9,299

)

(2,739

)

(21,134

)

(19,974

)

Other(1)

(4,441

)

—

(8,674

)

—

Consolidated operating earnings

$

29,671

$

53,568

$

98,024

$

150,591

Depreciation and amortization:

Domestic

$

9,602

$

7,360

$

23,233

$

22,399

International

4,304

4,259

12,072

13,125

Proprietary Products

1,947

2,218

5,755

6,658

Consolidated depreciation and amortization

$

15,853

$

13,837

$

41,060

$

42,182

Capital expenditures:

Domestic

$

9,572

$

3,071

$

23,376

$

10,274

International

3,206

3,223

11,659

8,053

Proprietary Products

718

1,009

2,754

2,436

Consolidated capital expenditures

$

13,496

$

7,303

$

37,789

$

20,763

September 30, 2017

December 31, 2016

Total assets:

Domestic

$

2,416,079

$

1,778,481

International

418,331

352,898

Proprietary Products

401,331

400,885

Segment assets

3,235,741

2,532,264

Cash and cash equivalents

98,415

185,488

Consolidated total assets

$

3,334,156

$

2,717,752

(1) Software as a Service (SaaS) implementation costs associated with the upgrading of our global IT platforms in connection with the redesign of our global information system strategy.

16

Note 14—Condensed Consolidating Financial Information

The following tables present condensed consolidating financial information for: Owens & Minor, Inc. (O&M); the guarantors of Owens & Minor, Inc.’s 2021 Notes and 2024 Notes, on a combined basis; and the non-guarantor subsidiaries of the 2021 Notes and 2024 Notes, on a combined basis. The guarantor subsidiaries are 100% owned by Owens & Minor, Inc. Separate financial statements of the guarantor subsidiaries are not presented because the guarantees by our guarantor subsidiaries are full and unconditional, as well as joint and several, and we believe the condensed consolidating financial information is more meaningful in understanding the financial position, results of operations and cash flows of the guarantor subsidiaries.